Puerto Rico kills $300 million power grid deal with Montana firm

Whitefish Energy Holdings workers restore power lines damaged by Hurricane Maria in Barceloneta, Puerto Rico. FEMA says it had no involvement in the decision to award a $300 million contract to help restore Puerto Rico's power grid to a tiny Montana company in Interior Secretary Ryan Zinke's hometown. Associated Press/Ramon Espinosa

SAN JUAN, Puerto Rico — The head of Puerto Rico’s power company said Sunday the agency will cancel its $300 million contract with Whitefish Energy Holdings amid increased scrutiny of the tiny Montana company’s role in restoring the island’s power system after Hurricane Maria.

The announcement by Ricardo Ramos came hours after Gov. Ricardo Rossello urged the company to scrap the deal.

“It’s an enormous distraction,” Ramos said of the controversy over the contract.

“This was negatively impacting the work we’re already doing.”

The current work by Whitefish brigades will not be affected by the cancellation, and that work will be completed in November, Ramos said, adding that the cancellation will delay work by a couple of months while the government finds new companies to help restore power to the island.

Roughly 70 percent of the island remains without power more than a month after Hurricane Maria struck the U.S. territory on Sept. 20 as a Category 4 storm with winds of up to 154 mph.

The cancellation is not official until approved by the company board. Ramos said it would take effect 30 days after that.

Ramos said the company already has paid the Montana-based company $10.9 million to bring its brigades and heavy equipment to Puerto Rico and has a $9.8 million payment pending for work done so far

Ramos said that cancellation of the contract will not lead to a penalty, but it’s likely the government will pay at least $11 million for the company to go home early, including all costs incurred a month after the cancellation.

Federal investigators have been trying to investigate the contract awarded to the small company from Interior Secretary Ryan Zinke’s hometown and the deal is being audited at the local and federal level.

Ramos said the company contacted Puerto Rico’s Electric Power Authority two days before the storm hit, at a time when it was becoming clear the hurricane could cause massive damage.

Ramos earlier said he had spoken with at least five other companies that demanded rates similar to those of Whitefish, but also wanted a down payment the agency did not have.

He said Sunday he hadn’t consulted with anyone else about signing the deal and didn’t notify the governor’s office for a week. He again praised the company’s work.

“They’re doing an excellent job,” he said.

“There’s nothing illegal here … Of that, we’re sure,” he said, adding that he welcomes a federal investigation. “The process was done according to the law.”

Ramos also has said the Federal Emergency Management Agency had approved of the deal, something the agency has denied.

FEMA said it has not approved any reimbursement requests from the power company for money to cover repairs to the island’s electrical system. The contract said the utility would not pay costs unallowable under FEMA grants, but it also said, “The federal government is not a party to this contract.”

FEMA has raised concerns about how Whitefish got the deal and whether the contracted prices were reasonable. The 2-year-old company had just two full-time employees when the storm hit, but it has since hired more than 300 workers.

Rossello said he has requested that crews from New York and Florida come help restore power in Puerto Rico.

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